The Reserve Bank of India (RBI) on Monday came up with a draft framework for sale of loan exposures, whereby it has proposed to deregulate the price discovery process for the sale of loan exposures.
According to the draft framework, sale of standard assets may be by assignment, novation or a loan participation contract, either funded participation or risk participation, whereas the sale of stressed assets may be by assignment or novation. Novation refers to the substitution of an old contract with a new one.
It further said that direct assignment transactions shall be subsumed as a special case of these guidelines.
In another major development, the central bank has proposed to do away with the Minimum Retention Requirement (MRR) for sale of loans.
“The price discovery process has been deregulated to be as per the lenders’ policy,” said an RBI statement.
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